A spokesman for the City regulator said yesterday it was looking into allegations from an insurance trade body, and may then launch a more in-depth investigation which could lead to a tightening of the rules governing such sites.

In recent years there has been an explosion in the number of websites that allow people to compare insurance policies and other financial products and they are used by millions of people every day. One of the biggest sites, Moneysupermarket.com, floated on the stock market last summer. Other well known names include Confused.com and Gocompare.com.

The sites usually rank policies by price, enabling people to check the quote they have been given against dozens of others. But not everyone has viewed them as good news for consumers. The insurer Direct Line refused to appear on any of the comparison sites and has taken out adverts criticising them, even though it is owned by Royal Bank of Scotland, which has allowed its other brands to appear.

On Monday, the British Insurance Brokers' Association (Biba) warned that the regulations governing these websites were outdated because they were written before the comparison site boom. It called for an "urgent review" of the rules, and said many websites, when making quotes, used assumptions "which could lead to consumers purchasing a policy which is not appropriate for them".

Research carried out for Biba also found that the majority of people using the sites to buy insurance found the details given confusing. It said 93% of people expected comparison sites to be regulated in the same way as insurance brokers.

"There are still too many people logging on and making a decision solely based on the price of a policy rather than the protections it offers them," said Biba's chief executive, Eric Galbraith. "Insurance products are complex, and it is important to understand the cover they provide."

The FSA spokesman said the regulator had looked at the sites before and decided it did not need to take action. But it will look at Biba's findings. Any resulting inquiry would look at whether these websites merely provide information, an activity that does not need to be regulated, or offer advice and recommend particular products, in which case they may need to be policed more closely.

Hayley Parsons, who runs Gocompare.com, a site already authorised and regulated by the watchdog, said: "We welcome the FSA looking again at the rules.

"Customers are switching to comparison sites because they are the most effective way of checking the market ... And they are saving big money. Just last week the AA highlighted the difference between the average motor insurance premium and the 'shoparound rate', which is the average of the three cheapest rates. [The difference] is currently over £200."